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VW nears deal to shift Detroit area offices

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DETROIT — Volkswagen of America Inc. is nearing a deal that would move hundreds of employees within the Detroit suburbs, from Auburn Hills to Southfield.

Sources familiar with the matter confirmed the contours of the German automaker’s plan, which involve moving its employees in Auburn Hills to the Galleria Officentre property near 12 Mile and Telegraph roads and building an addition west of the complex.

Negotiations are not final, and no leases are signed for the property, sources said. Any number of factors could ultimately torpedo the deal, including sign-off from Volkswagen.

Farmington Hills-based Friedman Real Estate owns the Galleria; David Friedman, its executive managing director and founder, declined comment.

“Volkswagen Group of America is exploring its options on the leased facility in Auburn Hills. No decision has been made,” the automaker said in a statement.

A site plan approved by the Southfield City Council in late January shows a 95,500-square-foot addition to the 200 Galleria building constructed across two stories. The plan refers to it as lab and tech space, but Volkswagen is not named as the user.

Terry Croad, Southfield’s planning director, said representatives from Friedman Real Estate said at a public meeting there would be up to 1,800 employees across the new addition, which would cost at least $8.5 million, and 300,000 square feet-plus at the Galleria.

The 200 Galleria building is 250,000 square feet across four stories, according to CoStar Group Inc., a Washington, D.C.-based real estate information service. It is part of a four–building complex that Friedman Real Estate purchased in 2016.

The 100 Galleria building is about 242,000 square feet, CoStar says. Sources said VW would take all of the 200 Galleria building and possibly part of the 100 Galleria building, which Friedman has been emptying for months to free up space for the automaker.

Friedman has also been in discussions to purchase the nearby AMC Star Southfield 20 movie theater at 25333 W. 12 Mile Road.

A deal has not been reached for the 22-acre site owned by Kansas City, Mo.-based EPR Properties. Marketing materials on the Friedman website show the property being redeveloped with hotel space and outlot retail, a fitness center with outlot retail or purely retail space. Friedman’s website lists the theater at 184,500 square feet with over 6,000 seats.

The automaker has 1,000 or more people in Auburn Hills, in customer relations and after-sales support, as well as engineering and environmental functions. It is also home to the automaker’s interface with U.S. regulators through its engineering and environmental office.

The company occupies all of the roughly 365,000-square-foot building at 3800 Hamlin Road, formerly the company’s North American headquarters, which moved to Herndon, Va., near Washington in 2008.

Auburn Hills Mayor Kevin McDaniel declined comment on the possible move.

Crain’s Detroit Business, an affiliate of Automotive News, reported in 2011 that VW was renewing its lease in the Auburn Hills building and putting $19.4 million in capital improvements into it. The property is owned by MAK Real Estate Investment Inc., which is controlled by Kuwaiti billionaire Fawzi Mohammed Al-Kharafi.

It was built in 1991.

This isn’t the first time VW has considered exiting the building. In 2011, it explored a move to Troy into what at the time was known as Baluster Park, today the North Troy Corporate Center, also at the time part of the Friedman Real Estate portfolio, although it has been selling off those buildings to users the last several years after repositioning them.

VW ultimately decided to stay in 3800 Hamlin after a series of tax abatements.

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